Centerra Gold (US:CGAU)2020-07-31 20:28Financial Data and Key Metrics Changes - The company reported net earnings of $80.7 million for Q2 2020, equating to $0.27 per share, with adjusted earnings after excluding non-cash adjustments at $97.8 million, or $0.33 per share [12][40]. - Cash provided by operations was strong at $268 million, leading to a free cash flow generation of $169 million for the quarter [12][42]. - The company finished the quarter with a debt-free balance sheet and a net cash position of $212 million, with total liquidity of $712 million [14][43]. Business Line Data and Key Metrics Changes - Gold production for the quarter was 219,692 ounces, with an all-in sustaining cost of $804 per ounce [26][41]. - Kumtor produced 173,245 ounces of gold at an all-in sustaining cost of $696 per ounce, while Mount Milligan produced 35,656 ounces at $679 per ounce, and Öksüt produced 10,791 ounces at $537 per ounce [27][33][42]. - All operations generated positive free cash flow, with Kumtor contributing $156.9 million, Mount Milligan $34 million, and Öksüt $5 million [13][29][42]. Market Data and Key Metrics Changes - The average realized gold price during the quarter was $1,620 per ounce, with copper at $2.06 per pound [38]. - Gold ounces sold increased by 10% compared to the prior year quarter, with a slight increase in copper sales [39]. Company Strategy and Development Direction - The company maintained its full-year gold production guidance between 740,000 ounces to 820,000 ounces for 2020, with expectations of increased production from Öksüt as it ramps up [44][45]. - A focus on capital allocation was highlighted, with discussions on how to utilize the growing cash reserves effectively [104]. Management Comments on Operating Environment and Future Outlook - Management noted that all operations remained virus-free during the COVID-19 pandemic, and the company has implemented strong safety measures [8][9]. - The company expects continued strong free cash flow generation and profitability due to rising gold prices and operational efficiencies [12][17]. Other Important Information - The company increased its quarterly dividend by 25% to $0.05 per share, reflecting confidence in its financial position [16][46]. - The company is planning to release an updated 43-101 technical report for Kumtor in the fall of 2020, which is expected to showcase an extended mine life [51][52]. Q&A Session Summary Question: Sustainability of elevated grade profile at Kumtor - Management indicated that while the grade will lower in the second half, they have flexibility in blending high, medium, and low-grade ores to maximize recoveries [60][62]. Question: Cost improvements at Mount Milligan - The improvements are attributed to operational efficiencies, lower diesel prices, and a streamlined organizational structure [64]. Question: Implications of COVID-19 on 2021 production profile - Management confirmed that 2021 production is expected to be consistent with original plans, despite not mining any ore in 2020 [73][76]. Question: Long-term water solution for Mount Milligan - There are no major milestones expected in the short term, but the company is working on expanding current water sources [92]. Question: Capital allocation strategy - The board is actively discussing capital allocation strategies, including potential investments and maintaining a strong liquidity position [104].